MSMEs may suffer job losses of upto 60% before March due to note ban: study

The study assigned by industry organisation AIMO says MSMEs were the worst hit due to demonetisation

The micro-small scale industries (MSME) in service providing activity in the country is expected to suffer a loss of 60 per cent in employment and 55 per cent in revenue before March 2017, as an impact of demonetisation announced by Prime Minister Narendra Modi in November 8, 2016.

According to All India Manufacturers’ Organisation (AIMO), preliminary findings of an expert committee formed by the organisation shows that this segment was the worst-hit due to demonetisation. AIMO said that the segment has suffered 35 per cent jobs losses and a 50 per cent dip in revenue in the first 34 days since demonetisation.

"While AIMO understands certain immediate repercussion of such Bold step by Government , it did not anticipate or be prepared for such a Jolt to industries even after 1 month," said AIMO, which represents over 3 lakh micro, small scale, and medium and large scale industries engaged in manufacturing and export activities.

The impact is due to various factors include cash inflow has become zero, cash withdrawal has been curtailed, staff absenteeism, Rupee become more weak, fund raising has been choked, banks not able to work on proposals, real estate becoming almost killed, fear among foreigners on sudden decisions impacting 86 per cent of currency scraped, very poor readiness and preparedness of the

AIMO's report stated that medium and large scale industries engaged in infrastructure projects, such as big-ticket road construction, reported a 35 per cent cut in employment and 45 per cent revenue loss. The number of jobs and revenue are expected to dip by 40 per cent by March.

Medium and large scale industries, including foreign companies, engaged in export-oriented activities reported 30 per cent job losses and 40 per cent revenue fall. This is likely to be 35 per cent and 45 per cent, respectively, by March.

In the manufacturing sector, medium and large scale industries reported the least job-losses in the first 34 days (5%) and took a revenue hit of 20 per cent. This dip is likely to be 15 per cent for both by March.

K E Raghunathan, national president, AIMO, said the studies were conducted by an expert committee set up by the organisation which included industrialists, SMEs and export sector experts, chartered accountants, consultants and lawyers.

AIMO had sent the findings to the Union commerce and finance ministries but is yet to receive any response.